The United Kingdom’s unemployment rate rose to 5 % in the third quarter, the highest level since early 2021. Data from the Office for National Statistics (ONS) show the rate increased from 4.7 % in the second quarter, surpassing analysts’ expectations of 4.9 % and reflecting weak economic growth.
The figures arrive ahead of the government’s annual budget, scheduled for 26 November. Finance Minister Rachel Reeves has signaled that the budget will include tax increases aimed at reducing government debt and funding public services. The Labour government, led by Prime Minister Keir Starmer, faces mounting challenges, with the party lagging in popularity polls 16 months after winning a general election.
Liz McKeown, ONS director of economic statistics, noted that “the number of people on payroll is falling, with revised tax data now showing falls in most of the last 12 months.” Analysts warn that the rising unemployment rate could dampen the economy. Isaac Stell of Wealth Club said there would be “no pre‑budget comforts that can be taken from today’s employment data,” adding that the combination of higher unemployment and slowing wage growth is likely to cause businesses to postpone hiring and investment until the outlook clarifies.
Some commentators, however, suggest that the weak data may boost the chances of the Bank of England cutting its main interest rate at the December monetary‑policy meeting, which could provide some relief. The latest unemployment figures will be a key consideration in budget deliberations, and the government’s response to this challenge will be closely watched as businesses and individuals await plans to address the economic slowdown and mitigate the impact of rising unemployment.
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